Indiana General Assembly Enacts New Environmental Legislation

05.07.2012

By Andy Bowman, Attorney, Bingham Greenebaum Doll LLP

While passage of employees’ right-to-work legislation and a statewide smoking ban dominated the General Assembly’s 2012 “short” session, a handful of bills addressing a diverse mix of environmental issues also were enacted. Areas touched by the new legislation include consolidation of the Air Pollution Control Board, Water Pollution Control Board, and Solid Waste Management Board into a single, new board; agricultural operations nuisance lawsuits; solid waste management districts; water resource planning; underground tank fees; environmental disclosures and hydraulic fracking.

HEA 1002 Abolishes Environmental Rulemaking Boards

HEA 1002 abolishes over 20 state commissions, committees, and boards, including the Air Pollution Control Board, the Water Pollution Control Board, and the Solid Waste Management Board effective as of January 1, 2013. The rulemaking functions of these three boards will be consolidated under a newly created Environmental Rules Board (ERB). The ERB will consist of 16 members. Eleven ERB members will be appointed by the Governor based upon recommendations from their representative constituencies:

Agriculture

Manufacturing

Environmental interests

Labor

Local government

Small business

Indiana licensed health professionals

Solid waste management

Electric public utility

General public (two members who are not qualified to sit on the ERB under any of the other representative constituencies)

The initial ERB members must be selected by December 31, 2012. Appointed members will serve a four-year term. Not more than six appointed members may be of the same political party. The eleven appointed members will be joined by the following five ex officio members:

Commissioner of the Indiana Department of Environmental Management (IDEM), who serves as a non-voting member;

Commissioner of the Indiana State Department of Health;

Director of the Indiana Department of Natural Resources;

Lieutenant Governor; and

Secretary of Commerce.

A quorum consisting of eight members of the ERB, five of which must be appointed members, must be present for taking actions. The Governor must annually select the chairperson and vice chairperson from among the appointed members. The ERB will select a technical secretary and legal counsel, in each case from a list of three persons who are recommended by the Governor and who may not be a current state employee. Neither the technical secretary nor the legal counsel is a voting member.

IDEM is required to support the ERB by handling correspondence, making or arranging investigations or surveys, and preparing reports as directed by ERB. The ERB may establish advisory committees consisting of unpaid volunteers to give advice on matters coming before the ERB.

The consolidation of air, water and waste rulemaking functions under a single board has led some to express concerns about the potential difficulty of finding persons who are knowledgeable of all three regulatory fields and willing to commit to the potentially significant time commitment required of ERB members and the lack of funding for the technical secretary and legal counsel positions. Concerns also have been raised that the ERB should have its own independent support staff rather than depend on IDEM for such support.

This bill amends the Indiana Right-To-Farm Act at Indiana Code § 32-30-6-9 by adding a new provision that allows a court to award court costs and attorney’s fees to a prevailing party involved in a nuisance claim against an agricultural operation where the court finds the nuisance claim or the defense of the nuisance claim was frivolous. The amendment becomes effective July 1, 2012.

HEA 1107 Adds Hydraulic Fracking Disclosure Requirement

Following a growing number of states that are requiring hydraulic fracturing operations to disclose information about the fluids that are injected into the subsurface, this bill requires the Natural Resources Commission to adopt rules requiring the disclosure of hydraulic fracturing treatment including the volume and source of base fluid used, a description of each additive product used in a hydraulic fracturing treatment and the maximum surface treating pressure and injection treating pressure.

Requires electronic device collector and recycler registration forms to be submitted not later than November 1 for the next program year.

Requires a legislative interim study committee to assess solid waste management districts in 2015 and every five years thereafter and issue a report by November 1 containing findings and recommendations for any changes that should be made to the statutes governing the districts.

Requires solid waste management districts to include additional information in annual reports using a standard form.

Prior to the next session, the Environmental Quality Service Council will study the powers of solid waste management districts to issue permits and impose and collect fees not authorized by a statute and the Commission on State Tax and Financing Policy will study financing issues involving solid waste management districts.

Requires that any environmental defects and any existing environmental restrictive covenants must be identified on the Indiana Real Property Transfer Law disclosure form effective July 1, 2012.

Abolishes the Clean Manufacturing Technology Board and transfers its functions to IDEM.

SEA 132 Boosts Water Resource Planning Efforts

This legislation empowers the Indiana Utility Regulatory Commission (IURC) to require all 824 Indiana Water utilities to file annual reports of water usage and operations and maintenance costs with the IURC, whether the utility is otherwise subject to IURC jurisdiction or not. The first report will cover calendar year 2012. The IURC will use the data to make reports to the Legislative Council each year. The reports will help develop statewide water resource planning.

The bill also amends Indiana Code § 36-9-1-10 to provide that a “watercourse” does not include underground aquifers or water in underground aquifers. This amendment is in response to a November 2011 Indiana Supreme Court decision in Town of Avon v. West Central Conservancy District in which the Supreme Court found that an aquifer is a “watercourse” under Indiana law and upheld a town’s ordinance regulating the withdrawal of groundwater within 10 miles of the town’s municipal limits. This change applies retroactively effective March 30, 2008.

This bill adds new provisions to the underground storage tank (UST) statutes to implement the federal delivery prohibition program. Until new implementing rules are adopted, IDEM is given statutory authority to issue temporary orders prohibiting the use of an UST determined to be ineligible for delivery of regulated substances. IDEM must give a written warning notice to the owner or operator that has failed to properly operate and maintain the UST’s corrosion protection, spill prevention, leak detection or overfill prevention equipment (Prevention Equipment) and 30 days to take corrective action before imposing a temporary order. If the owner or operator has failed to install Prevention Equipment, IDEM must give the owner or operator written notice before issuing a temporary order, but there is no provision for a time period to take corrective action. An owner or operator who fails to register a UST or to pay annual registration fees must be given 30 days to bring the UST into compliance before a temporary order may be issued. New owners of ineligible USTs must comply with IDEM orders issued to the prior owner.

The bill also abolishes as of July 1, 2012 the penalty of $2,000 per UST that accrued each year after an annual UST registration fee remained unpaid.

SEA 168 Grants IDEM the Right to Impose Liens for Unpaid UST Fees

This bill adds two new provisions impacting owners and operators of USTs.

Allows IDEM to record a lien against the property of an UST owner or operator who fails to pay UST fees.

Allows the transferee of a UST to recover funds from the Excess Liability Trust Fund if: (1) the transfer was a bona fide, good faith transaction at arm’s length between parties under separate ownership where the transferor has failed to pay the UST fees and IDEM has failed to record a lien against the property; or (2) the transferee pays all UST fees, past due fees and interest within 30 days of notice of the indebtedness.

Both changes become effective July 1, 2012.

To view a complete PDF of the March/April 2012 issue of the Environmental Letter, click HERE.